China’s central bank reduces the medium-term interest rate to 3.15% to reduce the impact of the coronavirus

The People's Bank of China (BPC, the country's central bank) today lowered the medium-term interest rate by 0.10 basis points to 3.15%, amid attempts by the country's authorities to reduce the economic impact caused by the epidemic of the new Covid-19 coronavirus.

According to the entity, the interest of the one-year loan facility to financial institutions goes from 3.25% to 3.15%.

The operation will affect an injection of 200,000 million yuan (26,315 million euros, 28,650 million dollars) in the financial system with a one-year maturity.

On November 5, the CPB had cut for the first time in three years the interest rate on loans to banks by 5 basis points leaving it at 3.25%.

Earlier this month, in an attempt to counteract the economic effects of the coronavirus outbreak, the institution had also lowered interest rates on reverse repurchase agreements, known as “repos,” to 2.4%.

Today's reduction in the interest rate on one-year loans could pave the way for a reduction in the basic interest rate, at 4.15% since last November.

Situation of Covid-19

The coronavirus epidemic continues to ravage China, where, according to the latest official data, 70,548 infected people rise and to 1,770 the dead.

In the last 24 hours until midnight on Sunday there were 2,048 new cases of infected and 105 new deaths compared to the previous day.

The epidemic has affected various sectors of the country's economy, from car factories to mobile phones, which have seen their supply chains disrupted.

The activity in the big cities is practically paralyzed, with the commercial premises closed and the people locked up in their houses to avoid the contagion.

Shanghai recovers from 'black Monday'

However, given the new incentives of the People's Bank of China, the country's stock markets have registered strong gains on Monday.

In fact, Shanghai, taken as a reference in the stock market of the Asian giant, has erased all the losses it suffered in its recent 'black Monday'. Just two weeks ago, 7.72% collapsed, registering its worst session in almost five years. A bump that has already recovered by rising today by 2.3% and standing at 2,983.62 points.